Market Insight

Vietnam to tighten control on online media

June 19, 2018

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst, Advertising and Television Media

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In June 2018, the Vietnamese government passed a cyber security law that will see the country tighten its control on online media companies operating in the market. Starting in 2019, online platforms such as Google and Facebook will be required to open local offices and store user data in the country. Tech companies will also be asked to remove any content within 24 hours of receiving a request from authorities.

The Asia Internet Coalition, an industry advocacy group that represents global technology companies warned that the new law would eventually limit the freedom of speech and slow  Vietnam’s economic growth.   

Our analysis

On implementation, IHS Markit expects increased government scrutiny to hurt Google and Facebook’s revenues in Vietnam; continuing orders to remove content and pressure to hand over user data could harm their local advertising operation. However, the impact on their global revenues will be minimal.

In 2017, Facebook and Google collectively accounted for 74% of online advertising revenues in Vietnam, a developing market in which online advertising is seeing double-digit growth. IHS Markit estimates Facebook’s operations in Vietnam generated $220 million of advertising revenues in 2017, representing an insignificant share (less than 1%) of its global advertising revenue of $29.5 billion. Similarly, Google’s global advertising revenue amounted to $59.3 billion in 2017 and we estimate Google Vietnam accounted for $150 million of the total.

Considering the above, the feasibility of setting up a local office in Vietnam by global companies is doubtful. The two companies have regional head offices in Singapore, but this is not going to help under the new legislation.

Earlier in February 2017, the country’s media regulator ordered the cleanup of anti-government and offensive content on Google’s YouTube and Facebook, and put pressure on advertisers to stop advertising on the two platforms in protest over fake content. As a result, advertisers including Unilever, Ford and Yamaha Motor reportedly suspended advertising on the global online platforms.

Besides China’s strict foreign media censorship, Russia is also known for its strong control on online media. The country blocked professional social media platform Linkedin in 2016 and over the last two years, there have been several threats to ban online platforms including Facebook, Twitter, and Telegram, whereby they are required to store Russian user data domestically.     

Research by Market
Media & Advertising
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